Saturday, May 28, 2011

DA looks into Channelview complaints | Houston & Texas News | Chron.com - Houston ChronicleI don't know much about John Carona's businesses or how they conduct their affairs. Everything I have to say in this post is about Texas State Senator John Carona, human being. The man is a public figure who is actively making and influencing public policy in the area I have specialized in since 1985, and I have an obvious and legitimate reason to comment on his activities.

This article from the Houston Chronicle back in 2009 details some of the things that people were saying about Carona. I was quoted in the article on the general issue, although I was (and still am) unfamiliar with the details of these Texas incidents.

The picture that is shaping up is something like this. John Carona is a state senator who had a lot to say about the content of Texas laws on HOAs and the businesses that serve them. He is also a powerhouse in the property management field, being the principal in a complicated network of management firms in multiple states, that has expanded rapidly in recent years. These management firms are also connected with other businesses that serve HOA in other ways. As the article says,

"Carona, a five-term senator who chairs the Homeland Security and Transportation Committee, is Associa's founder, president and chief executive officer. He serves on the boards of dozens of other companies that provide banking, insurance, Web sites and other services to homeowners associations, according to his latest personal financial disclosure statements filed with the Texas Ethics Commission. Carona authored legislation in 2001 that preserved and modified homeowners associations' controversial authority to foreclose on homes based on delinquent assessments. He said he sees no conflict of interest in his involvement with legislation affecting the industry that provides much of his livelihood."

So--he is a public official, and he has a lucrative career. He has become a legislative specialist in the field where he has his business interests. These are all public facts and in and of themselves don't create any impropriety. The reporter raises the potential of a conflict of interest, and asked Carona about it, and he denies it. One can see how that could potentially happen with specific pieces of legislation, but no legislative-business conflict of interest is spelled out in the article as nearly as I can tell.

But here's the problem: when somebody, such as the homeowner/BOD member in this article, Sam Campbell, raises questions about the details of practices engaged in by Carona's firms, they get threatened by Carona's attorneys. Back to the 2009 article:

"In April, Campbell began sending information to the district attorney's office, which issued subpoenas for four Sterling Green South bank accounts. Assistant District Attorney Kelli Johnson said it will take months to analyze the records. Johnson declined to say whether the subpoenas were issued to PMG or to the banks. Carona said no one at his companies had received subpoenas related to Sterling Green South. Campbell also has sent numerous e-mail and written correspondence to PMG employees and attorneys detailing accusations that the company used Sterling Green South funds improperly. On July 31, PMG fired back. Benjamin D. Wood, a Washington, D.C., attorney representing the company, threatened to sue Campbell for defamation and business disparagement if he continues his campaign."

Now, I have no sympathy for people who maliciously libel people on the internet or anyplace else. People should be able to earn a living or serve in public office without having their character impugned. But where is the evidence that there was any defamation? It appears from the story that all Mr. Campbell did here was try to get to the bottom of some complicated transactions that he thought raised some questions about how his association's money was handled and spent. As a BOD member or even an ordinary HOA member, what is wrong with that? Isn't that an appropriate activity for somebody who has a fiduciary duty to the members? Nothing in that Houston Chronicle article looks like defamation to me. Why wouldn't Carona simply have his company or companies produce the records and explain the transactions?

And what about this new suit against Bill Davis? I have now read the petition that Carona's lawyers filed in the new case that led to the subpoena for my blog records. Again--where is the evidence of defamation? There is not one single specific act of defamation spelled out in the entire complaint. It just claims that between 2008 and 2010 Davis defamed Carona's companies (and Carona's name doesn't even appear in the entire complaint!) on "various news and information web sites," including the Dallas Morning News and city-data.com. The petition says that Davis claimed these firms "engaged in illegal behavior and unethical business practices," but there are no quotations of what was supposedly said. That's right: a defamation suit that fails even to quote a single allegedly defamatory statement...and that also fails to mention that the actual human being behind all the corporate plaintiff entities is a public figure. Why does that matter? Because in the USSC case of New York Times v. Sullivan, the court said that public officials and other public figures can't recover for libel unless they can prove "actual malice," which requires that the defendant either knew the statement was false or acted with reckless disregard for whether it was true or not. The petition pleads the elements of actual malice, but again--doesn't say what facts support the claim that Davis knew his unspecified statements were false.

I don't know Texas law, but here in Illinois I am confident that wouldn't be enough to state a valid claim.

Three questions for you:

1. Does the case against Bill Davis sound like a viable defamation suit to you? Where's the beef?

2. Is Carona using his lawyers to prevent people like Mr. Campbell and Mr. Davis from raising issues of public concern? Issues that relate directly to the very things he works on in his capacity as a legislator? If so, why is he doing that?

3. And isn't that a question that should be addressed to him, as a public official of the State of Texas, by the press?

Pending sales of previously owned homes took a tumble in April, according to data from an industry group, a foreboding sign that the key spring shopping season is off to a weak start.

The National Assn. of Realtors said Friday that its index for pending home sales, which is based on the number of contracts signed each month, fell 11.6% from March and was down 26.5% from the same month last year. The drop in the index was another indicator that buyers are scarce.

"Really the housing market is still in the doldrums," said Gerd-Ulf Krueger, principal economist at Housingecon.com. "I think what's really holding it back is an utter lack of confidence that this will turn around soon."------------------------------------------------April is traditionally considered a good month for home sales.

HOA reform group targets law that allows Texas associations to repossess homes over HOA rules | Texas Watchdog
So here is what appears to be the explanation the lawsuit that produced the subpoena (see below), according to one source:
--------------------"The HOA-reform groups continue to be irritated by the man who helped craft and pass some of those laws, state Sen. John Carona, who heads Associa, a national company that refers to itself in press releases as “the leader in community association management.”
It’s an old fight – at least since 2006 disgruntled homeowners have been angered by Carona’s influence and operations. Carona has recently fought back in a civil lawsuit filed in Hays County against Bill Davis, a Friendswood lawyer and advocate for HOA reform. Carona’s Associations Inc. also names “ICDELIGHT” as a defendant, referring to an online handle that Davis used in speaking out against HOAs and Carona, whom he has called a “shakedown artist” in interviews. Davis calls the action a “SLAPP suit” designed to intimidate him and his colleagues from speaking out against Carona."
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The term SLAPP suit means "Strategic Lawsuit Against Public Participation," used by corporations to intimidate critics.

I still don't get what this weblog has to do with the lawsuit. The fact that my weblog is targeted is ironic, given that from time to time I have warned anonymous commenters about the importance of avoiding defamatory remarks, and I delete them whenever I notice them. That's because I knew that sooner or later the community association industry would retaliate against its critics with this sort of lawsuit.

For what it's worth--my understanding of Google's policies is that they will divulge 6 months worth of IP addresses. Anything older than that is purged. You can read about those policies at this website, which goes to a firm that helps people sue for internet defamation.

To comply with the law, unless you provide us with a copy of a motion to quash the subpoena (or other formal objection filed in court) via email at google-legal-support@google.com by 5pm Pacific Time on June 16, 2011, Google may provide responsive documents on this date.

For more information about the subpoena, you may wish to contact the party seeking this information at:

If you have other questions regarding the subpoena, we encourage you to contact your attorney.

Thank you,

Google Legal Support

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I don't know what information John Carona's lawyer (Kelly Chen) is trying to get. I have never met William Davis or John Carona. For those who aren't up on these things, Associa is a property management firm run by John Carona, the Texas legislator/property manager whose name keeps popping up in connection with foreclosures and legislation. I have emailed Carona's lawyer and google legal to find out what they want. If anybody knows, clue me in.

Wednesday, May 25, 2011

“The community is in a situation where they have less than enough money to do the repairs they need to make. So they need to do so as efficiently as possible,” said HOA Attorney Jerry Orton.

Orton said a third of the settlement went to lawyers from another firm that handled the case. Homeowners aren’t happy. -----------------------------------------------------------Thirty-three percent attorney contingency fee contracts may work well in personal injury cases, but can be disastrous in condo construction defect lawsuits. Condo complexes like this one face the prospect of falling into Tyler Berding's death spiral in future years.

A study conducted by Nevada psychology professor Gary Solomon suggested that oversight over a homeowner’s living conditions creates a two-tailed psychiatric disorder called “HOA Syndrome.”

Talking about his experience inside an HOA in Las Vegas, Solomon said, “I learned that residents, primarily principal homeowners, were living in a war zone, not identifiable by bombs, guns and burning buildings. Rather, a war zone masterfully orchestrated by a few fellow homeowners attempting to control their companion neighbors while making a few bucks on the side and gaining sadistic pleasure from watching their neighbors live in pain.”

Banks and lending institutions responsible for foreclosures in Illinois would pay for the maintenance of thousands of vacant houses, rather than putting that financial burden on municipalities statewide under a plan in the Illinois House.---------Good idea. Thanks to Fred Pilot for this link.

Why Does the NYT Want the Government to Make Housing Unaffordable? | Beat the Press"Actually no; it never looked like "things were improving" to people who follow the housing market. It looked like the tax credits were temporarily delaying the deflation of the housing bubble. This delay allowed banks and investors to have hundreds of billions of dollars in mortgages, which would be underwater today, taken off their books and replaced by Fannie and Freddie guaranteed loans, through sales or refinancing." ----------------This blog post is by Dean Baker, who I think is a very bright guy with a record of accurate predictions. He seems to think that housing is still overpriced by historical measures.

HOAs file foreclosure notices “fairly regularly, but in 99% of the cases, the property is worth less than the underlying debt. Just because you get a house for $6,000 doesn’t mean you get a bargain on the home,” says Kurt De Meire, CEO of countyrecordsresearch.com, a foreclosure processing company.

“This is why it’s rare that associations follow through with their own foreclosures,” he says. “They don’t want the burden of the senior debt.”In fact, most associations don’t even bother starting the foreclosure process, he says. “It’s a waste of their money to pursue a property for unpaid dues.”

De Meire says sometimes homeowners associations foreclose, evict the residents, then decide not to keep the senior loan or loans current. But using a foreclosure notice as a tool to persuade a homeowner to pay fees or force them out, he says, costs HOAs “several thousand dollars.”--------------------------------------------As residential real estate prices continue to deflate, foreclosure becomes an increasingly impractical means to recoup delinquent HOA assessments -- at least from the perspective of this foreclosure processing company head.

Sunday, May 22, 2011

Strategic defaults on mortgages - chicagotribune.com"Strategic default — opting to walk away from a mortgage you can afford — isn't a new phenomenon in the housing crisis. But with home values continuing to decline, more owners are finding themselves in a position where they may see it as a savvy business decision to destroy their credit rather than wait years for prices to recover."--------------------------This recovery is just storming along. I know--why don't we give more tax cuts to rich people?

About Me

I am a professor of political science at the University of Illinois at Chicago, and an adjunct professor at The John Marshall Law School in Chicago. Nothing contained in this blog represents the opinions of UIC or John Marshall, and nothing you see here is legal advice. You can reach me at ecmlaw@gmail.com